Financial Crime World

Swiss Federal Ordinance on Combating Money Laundering and Terrorist Financing in the Financial Sector

The Swiss government has enacted the Swiss Federal Ordinance on Combating Money Laundering and Terrorist Financing in the Financial Sector (AML Ordinance) to combat money laundering and terrorist financing in the financial sector.

Key Provisions

The AML Ordinance sets out various provisions aimed at preventing, detecting, and reporting suspicious transactions that may involve money laundering or terrorist financing. Some of the key provisions include:

Due Diligence Obligations

Financial intermediaries are required to perform due diligence on their customers, including identifying beneficial owners and conducting risk assessments.

  • Customer Identification: Financial intermediaries must identify their customers and verify their identity.
  • Beneficial Owner Identification: Financial intermediaries must identify the beneficial owner of a customer’s account or transaction.
  • Risk Assessment: Financial intermediaries must conduct a risk assessment to determine whether a customer poses a money laundering or terrorist financing risk.

Reporting Obligations

Financial intermediaries must report suspicious transactions to the Money Laundering Reporting Office Switzerland (MROS).

  • Suspicious Transaction Report: Financial intermediaries must submit a suspicious transaction report to MROS within 7 working days of identifying a suspicious transaction.
  • Follow-up Report: If additional information becomes available after submitting the initial report, financial intermediaries must submit a follow-up report to MROS.

Licensing Requirements

Lead auditors performing audits in accordance with Article 24a AMLA must dispose of sufficient expertise and appropriate practical experience, which can be demonstrated by:

  • 100 audit hours: Lead auditors must have performed at least 100 audit hours in AMLA matters over the last four years.
  • 4 hours CPD: Lead auditors must have completed at least 4 hours of continuous professional development (CPD) in the area of AMLA per year.

Independence Requirements

Lead auditors performing audits of lawyers and notaries public must comply with the requirements set out in Article 11 AOA and Article 728 CO.

  • Independence: Lead auditors must be independent of the audited entities.
  • Confidentiality: Lead auditors must maintain confidentiality regarding the information obtained during the audit.

Annexes

The AML Ordinance includes two annexes:

Annex 1: Form for Traders

This form is used by traders to fulfill their due diligence and reporting obligations, including identifying contractual parties and beneficial owners.

  • Trader Identification: Traders must identify themselves and verify their identity.
  • Beneficial Owner Identification: Traders must identify the beneficial owner of a customer’s account or transaction.
  • Risk Assessment: Traders must conduct a risk assessment to determine whether a customer poses a money laundering or terrorist financing risk.

Annex 2: Repeal and Amendment of Other Enactments

This annex sets out the repeal and amendment of other enactments, including the Implementing Ordinance on the Professional Activity as Financial Intermediary (OPAFI).

  • Repeal: Certain enactments are repealed by this ordinance.
  • Amendment: Certain enactments are amended by this ordinance.

Transitional Provisions

The AML Ordinance includes transitional provisions to ensure a smooth transition to the new requirements. For example, financial intermediaries that are directly supervised by FINMA until the Act enters into force must submit a report to the self-regulatory organization on the conformity of their business activities with the provisions of the AMLA.

  • FINMA Supervision: Financial intermediaries that are directly supervised by FINMA must comply with the requirements set out in this ordinance.
  • Self-Regulatory Organization: Financial intermediaries must submit a report to the self-regulatory organization on the conformity of their business activities with the provisions of the AMLA.

Conclusion

In conclusion, the Swiss Federal Ordinance on Combating Money Laundering and Terrorist Financing in the Financial Sector is an essential piece of legislation aimed at preventing, detecting, and reporting suspicious transactions that may involve money laundering or terrorist financing. The ordinance sets out various provisions, including due diligence obligations, reporting requirements, licensing requirements, and independence requirements for lead auditors. By analyzing this ordinance, individuals and entities can better understand the legal framework governing anti-money laundering activities in Switzerland.